financial planning

Unlocking Your Wealth Potential: See How CDs Beat Savings Accounts

Discover the power of certificates of deposit (CDs) and compare savings options to align with your savings goals. Learn how CDs provide stable growth with fixed interest rates and competitive CD rates.

When it comes to achieving financial goals, choosing the right savings method is the first step in a much larger plan. Actually, the first step would be to have some type of income, but you’re reading this, so we’ll assume you’ve already locked that puzzle piece into place.

Among the various options available, certificates of deposit (CDs) warrant closer consideration and stand out as a reliable choice against the many savings and investment options clawing for your attention. Explore how CDs work, and compare them to other savings methods to help you make an informed decision that aligns with your financial aspirations.


Certificates of deposit are a type of financial instrument that offer guaranteed returns and fixed interest rates over a specific term. Unlike traditional savings accounts, CDs lock in your money for a predetermined period, which can range from a few months to several years and have several investment advantages.

Guaranteed Returns and Fixed Interest Rates

One of the standout certificate of deposit benefits is the predictability. You can count on your money earning a fixed interest rate throughout the entire term. This stability shields your savings from market fluctuations and ensures a steady growth of your funds.

Low Risk and NCUA Insurance

Credit Union CDs are considered low-risk investments because they’re backed by the National Credit Union Association (NCUA) for up to $250,000 per depositor. This protection allows you as an investor to breathe a whole lot easier knowing that, if the economy completely tanks, your deposit remains safe and secure.

Variety of Term Options

CDs come in a range of term lengths, allowing you to choose a timeframe that suits your financial goals. Whether you're saving for a short-term purchase or planning for retirement in the distant future, you’re guaranteed to find a compatible CD term soulmate.


CDs offer unique benefits, but it's always a good idea to compare CD pros and cons with other savings methods in order to determine which one aligns best with your overall financial goals. Let’s consider these 3 savings options: Traditional Savings Accounts, Money Market Accounts, Treasury Bonds

Traditional Savings Accounts

Savings accounts are a no-brainer for this list because they’re the most common type of savings – I mean, it’s all in the name itself. Traditional savings accounts are popular due to the fact they’re the most accessible form of savings, providing higher liquidity and allowing for easy withdrawals, often without incurring penalties.

The downside of traditional savings accounts is that unless you scour the realm of financial institutions and typically have a massive chunk to deposit, you’re pretty much guaranteed to receive a low interest rate, making them less suitable for long-term savings.

Money Market Accounts

Next up on our list is money market accounts. These vary across different banks and credit unions, but they typically offer competitive interest rates, semi-liquidity of funds, and are insured up to $250,000 as well. (Educational side note: Credit union accounts are insured by the NCUA, whereas banks are FDIC-insured. The more you know.)

Keep in mind, however, money markets often require higher minimum balance requirements in order to earn the high-yield rates, and they can incur fees, both for falling below the minimum threshold, or for withdrawing over a certain number of times per month. Always check your credit union or bank’s fee schedule before making your decision. 

Check out more about SunWest Money Market Accounts.

Treasury Bonds

Last up, let’s talk about treasury bonds. Treasury bonds are backed by the U.S. government, and when you purchase one, you’re essentially providing the government a loan for a fixed period to fund its operations. When you invest in treasury bonds, you receive interest payments (also called coupon payments) regularly, and the principal amount you invested is repaid at the bond’s maturity.

Another secure investment, treasury bonds often offer higher yields than CDs and are a great contribution in diversifying your financial portfolio. The drawback? Treasury bonds often require longer terms and may have lower liquidity compared to CDs.


Now that you have a good understanding of how each of these savings methods functions, consider the following factors to make your decision. 


Financial Goals and Time

Evaluate your short-term and long-term financial objectives. If you have specific plans or milestones in mind, a CD term aligned with your goals can help you achieve them.

Risk Tolerance

Assess your comfort level with risk. If you prioritize stability, CDs are a perfect choice to safeguard your funds. However, if you’ve got a bit of a gambler in you that’s willing to take on more risk, you could potentially earn higher returns. Just remember that we use the term “gamble” for a reason – exploring risky investment options can be…well, risky. Make sure to do all your research before moving forward with high-risk investments.

Funds Availability

Consider how quickly you may need access to your funds. If you anticipate the need for frequent withdrawals or emergency cash, a savings account or money market account may give you more liquidity with fewer penalties.

Current Economic Conditions

Stay informed on interest rates and market conditions. If interest rates are low, it’s to your advantage to lock in a CD at a higher rate. On the other hand, if rates are expected to rise, it could be better to keep your options open.

In comparing savings options, CDs emerge as a clear winner over traditional savings accounts and most money market accounts in the quest to maximize wealth. With guaranteed returns, fixed interest rates, and the flexibility to choose from various terms, certificates of deposit provide a reliable path towards achieving your savings goals.

The toughest competition is between CDs and treasury bonds, however, CDs typically have lower investment requirements and offer more flexible terms, making them a top contender for anyone seeking to unlock their wealth potential.

Ready to maximize your savings? Use our simple CD calculator and view current CD rates to explore your potential returns!

July 5, 2023

Published by SunWest Credit Union

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